One Little Medicaid Waiver Could Spell Big Changes

Arkansas proposes 'partial expansion' that would boot 60,000 from program

WASHINGTON -- Medicaid may have escaped deep cuts this summer, after several repeal and replace bills foundered in the Senate, but the administration has another vehicle for implementing conservative-friendly changes on a state-by-state basis through the waiver process.

One particular waiver, crafted by Arkansas, if approved, could create a pathway for other "red" states to expand the program on their own terms by allowing a "partial expansion" of the program. In Arkansas's case, which already technically expanded Medicaid -- albeit in a nontraditional fashion -- the effect would actually be to disqualify some 60,000 current enrollees from the program.

The state's amended "Arkansas Works" waiver would roll back the income threshold for Medicaid eligibility from 138% of the federal poverty level to 100%. Those no longer qualifying could try to enroll in plans supported by federal tax credits or find employer-sponsored insurance. the state's Medicaid agency said.

Arkansas also wants a "work requirement" for enrollees ages 18-49 who are "able-bodied" with no dependents. They must find paying jobs, volunteer positions, or participate in work training programs for at least 20 hours a week, J.R. Davis, a spokesman for Gov. Asa Hutchinson (R), told MedPage Today in a phone interview.

"If you want this coverage you have to be able to put some skin in the game," Davis said.

Those who do not meet the requirement, and who lack an exemption, will be dropped from the program and blocked from re-enrollment, the ARMedicaid website noted.

Arkansas Expansion

Arkansas initially expanded Medicaid under a different waiver under Democratic Gov. Mike Beebe in 2013. That waiver allowed the state to use Medicaid expansion dollars to provide private insurance. This was known as the "private option."

So instead of increasing Medicaid eligibility the state directed those federal dollars to would-be Medicaid recipients who could then choose plans on the exchanges, Nicholas Bagley, JD, of the University of Michigan, explained in The Incidental Economist.

For the 60,000 people who are expected to lose coverage by scaling back Medicaid expansion eligibility, Davis said the subsidies will allow them to access coverage, just as it does for those who are currently on the exchanges.

"With the limited amount of resources from the state, we want to focus those resources on those who need it most," Bagley wrote.

Medicaid is jointly run by the states and federal government. Under the Affordable Care Act, Medicaid expansion was intended to increase eligibility to most adults earning up to 138% of the federal poverty level. The federal government would provide 100% of the funding for the expansion population, in the first few years, with that percentage tapering off after that.

The ACA allows states to seek waivers from some of its requirements. Several states contemplated expanding Medicaid eligibility only to those at 100% of the federal poverty level instead of the usual 138%, but that idea was soundly rejected by the Obama administration.

The new administration under Trump may take a rosier view of similar proposals.

If "red" states needed a sign, Seema Verma, the new administrator for the Centers for Medicare and Medicaid Services (CMS), helped craft Indiana's "Republican-friendly [Medicaid] expansion." Indiana's program required Medicaid recipients to make small monthly payments or lose coverage.

Reactions

If the new Arkansas waiver is approved it could have a trickle-down effect on states that had resisted expansion in the past, said Matt Salo, executive director of the National Association of Medicaid Directors.

"I think it would certainly send a signal to the Rick Scotts and the Greg Abbotts to say ... 'Potentially we could do this,'" Salo told MedPage Today, referring to the Republican governors of Florida and Texas, respectively.

While some states may choose to expand eligibility to 138% of federal poverty level, the right cut-off for others may be 100% or even 75%.

But expansion, even on a lesser scale, is still a win for the enrollees in most states, he said.

"People, single adults, between 0% and 100% of poverty are uninsured. If Florida does an expansion up to 70% or 80%, that's a whole bunch of people who would have coverage who didn't before," Salo said.

Marquita Little, health policy director for Arkansas Advocates for Families and Children, is skeptical that people will easily transition to a marketplace plan and receive comparable coverage at comparable costs using tax credits. She noted the uncertainty surrounding the exchange marketplaces given the atmosphere in Washington.

The state doesn't have a good track record for smooth transitions, she added, pointing to a a renewal process in 2015 that left some people not realizing their coverage had lapsed until they showed up for doctor's appointments.

Waivers are intended to pursue the objective of the Medicaid program, observed Joan Alker, executive director for the Center for Children and Families.

"Taking coverage away from people ... unless you're 100% certain everybody's going to get coverage and they're going to get just as good coverage," doesn't meet that objective, she argued.

Davis, the governor's spokesman, insisted the transition wouldn't be a problem.

"There's facts versus fiction. The facts are they will be able to go onto the exchange and we have staff at the Department of Health and Human Services who will be able to help them," he said.

'On CMS Time'

Bagley told MedPage Today in an email that advocacy groups "can and probably will bring lawsuits," but there are credible arguments on both sides.

"On the one hand, it's a little awkward to say that restricting Medicaid eligibility advances the objectives of the program," he said. But, he added, "Arkansas might be able to argue that the 100-to-138 expansion population will have more choices if they can use premium tax credits to shop for coverage instead of Medicaid dollars."

The courts generally defer to HHS on waivers, but will "definitely put the agency through its paces," he wrote.

Four other states -- Indiana, Kentucky, Iowa, and Massachusetts -- currently have Medicaid expansion waivers pending with CMS, according to the Kaiser Family Foundation. All but the Bay State's include a work requirement, and Indiana and Kentucky would lock out enrollees if they fail to renew eligibility by certain deadlines.

As for when a decision on Arkansas's application is expected, William Golden, MD, medical director for Arkansas Department of Human Services/Medicaid, said in an email that he expected to have a decision by now but heard it had been delayed by the recent hurricanes.

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